SAFETY FIRST!

Aug 1, 2004


MARKET NEWS DIGEST

-> NY/NJ/DC Put on `Orange' Terror Alert, Ridge Says
-> Economists rate Kerry -CNNfn
-> $43 Oil, 21-year high, Stocks take a hit -CNNfn
-> July Consumer Confidence Rises to 2-Year High
-> 9-11 Panel Wants to Release Four More Reports -DR
-> MIDDLE-EASTERN INVADERS CAUGHT IN ARIZONA -TT
-> BRITAIN to Issue Safety Leaflet on Terrorism -Reuters
-> OIL prices rise on terrorism fears -Reuters


COMMENTARY

-> DNC: LIARS OF THE WORLD "UNITE!" - Craig R. Smith, SATC
-> THE DEMOCRATIC MYTH, AMERICA THE FREE? -Bill Bonner, DR
-> THE CURRENCY OF TERRORISM -Thomas Kostigen, CBSMW
-> GOLD: THE RED CROSS OF INVESTMENT ASSETS -SATC
-> Faith versus History -John Mauldin, Frontlinethoughts.com
-> The Biggest Flip-Flopper: Kerry or Bush? -Michael A. Peroutka
-> KERRY'S BATTLE PLAN -BusinessWeek
-> O'Reilly's "No Spin Zone" is a farce -Bill Murphy, GATA
-> The Separation of Republican and Democrat -Tom Jackson, GoStrategic


ALERT: CNBC POLITICAL/ECONOMIC DEBATE: PART III

AS the DNC Convention cranked up on Monday morning, Swiss America CEO Craig R. Smith and Mark Weisbrot from the Center for Economic Policy Research had a live debate on the topic of "Bush vs. Kerry Economic/Tax Plans." This is the third time in the last two months that Craig Smith has been asked to defend the Bush policies with someone from the liberal think tank, CERP. It was both entertaining and educational. Read the full transcript of this ongoing debate HERE.

For an entertaining 2-minute video spoof on both candidates entitled "This Land," visit JibJab.com PG Rating! ** NEWS FLASH: Business-killing DNC: It’s a bust -Boston Herald - 7-29-04. **


FOUNDERS QUOTE OF THE DAY

"The citizens of the United States of America have the right to applaud themselves for having given to mankind examples of an enlarged and liberal policy worthy of imitation. ... It is now no more that toleration is spoken of as if it were by the indulgence of one class of citizens that another enjoyed the exercise of their inherent natural rights, for happily the Government of the United States, which gives to bigotry no sanction, to persecution no assistance, requires only that they who live under its protection should demean themselves as good citizens in giving it on all occasions their effectual support."

-George Washington


MARKET NEWS DIGEST


DC/NY/NJ Put on `Orange' Terror Alert, Ridge Says

Aug. 1 (Bloomberg) -- The Department of Homeland Security is raising the terrorism risk status for the financial services sectors in New York, Washington and northern New Jersey, Secretary Tom Ridge said.

``We do have new and unusually specific information about where al-Qaeda would like to attack,'' Ridge said at a news conference in Washington.

He said the al-Qaeda terrorist organization was targeting the International Monetary Fund and the World Bank in Washington, Citigroup Inc. and the New York Stock Exchange in New York, and Prudential Financial in northern New Jersey.

The New York Police Department said earlier today it has received intelligence reports that al-Qaeda, the terrorist group that attacked the World Trade Center, ``continues to target commercial and financial institutions, as well as international organizations.''

"The preferred means of attack would be car or truck bombs," Homeland Security Secretary Tom Ridge said in a briefing with journalists. That would be a primary means of attack."

The government said the new intelligence indicated the meticulous planning of al-Qaida. He identified explosives as the likely mode of attack, as opposed to a chemical or biological attack or a radiological "dirty" bomb.

Ridge said the government's threat level for financial institutions would be raised to orange, or high alert, but would remain at yellow, or elevated, elsewhere.

Ridge said it would be up to New York City officials to decide whether to move to the highest level, red. The city has remained on orange since the attacks of Sept. 11, 2001.

The threat potential remains through the Nov. 2 elections, Ridge said.

The secretary said the government took the unprecedented step of naming specific buildings because of the level of specificity of the intelligence. "This is not the usual chatter. This is multiple sources that involve extraordinary detail," Ridge said. He said the government decided to notify the public because of the specificity of detail it had obtained.

Ridge acknowledged that protecting these buildings, located in heavily populated areas, would require additional security measures, especially because thousands of cars and trucks travel through these cities daily.

"Car and truck bombs are one of the most difficult tasks we have in the war on terror," Ridge said.

Local and state officials were notified earlier in the day and Ridge said new security procedures were already being implemented.

The government provided a wealth of detail that it had picked up in the past 36 hours, but a senior intelligence official described it only on condition of anonymity. The official described "excruciating detail" and meticulous planning "indicative of al-Qaida."

The official said the intelligence included security in and around these buildings; the flow of pedestrians; the best places for reconnaissance; how to make contact with employees who work in the buildings; the construction of the buildings; traffic patterns; locations of hospitals and police departments; and which days of the week present less security at these buildings.

To illustrate the level of detail obtained, the official cited these examples: midweek pedestrian traffic of 14 people per minute on each side of the street for a total of 28 people; that some explosives might not be hot enough to melt steel; and that the construction of some buildings might prevent them from falling down.

The official said he had not seen such extraordinary detail in his 24 years in intelligence work.

A White House spokeswoman, Erin Healy, said the intelligence on the threat is "very new, coming in during the last 72 hours."

"The president made the final decision today agreeing with the recommendation of Secretary Ridge to go ahead and raise the threat level in these select areas," Healy said.

This was the first time the color-coded warning system had been used in such a narrow, targeted way, Ridge said at a news conference at department headquarters.

"With this kind of information comes action," Ridge said. "This is sobering news."

This step will "bring protective resources to an even higher level" and alert industry employees to be extra vigilant, he said. Actions to tighten security around the five buildings he specifically named are under way, Ridge said.

He said workers at those buildings should get guidance from security officers at each site and remain alert as they go to work.

http://www.bloomberg.com

RELATED STORIES:
Terrorism: America's Response - Special Report/DVD Offer


Economists rate Kerry -CNNfn
Due in part to gridlock, White House hopeful may have little effect on jobs, deficits, offshoring.
July 29, 2004
By Mark Gongloff, CNN/Money senior writer

NEW YORK (CNN/Money) - John Kerry, the Democratic candidate for president, has promised to create 10 million jobs, cut the federal budget deficit in half and stop U.S. companies from moving jobs overseas.

But many economists think economic and political realities could make Kerry's job extremely tough.

Kerry is scheduled to accept his party's nomination at its convention Thursday night in Boston. The highlight of his economic plan, so far, has been his pledge to repeal the tax cuts given by Congress and President Bush to families making more than $200,000 per year.

Kerry plans to return the savings to middle-class and lower-income families, in the form of further tax cuts and credits, along with a plan to cut health costs.

Wall Street is unhappy about the prospect of this happening, fearing that wealthy people will have less money to invest.

For all its fretting about a Kerry presidency, Wall Street could get what it wants most of all in November: gridlock.

If Kerry takes the White House and Congress stays in Republican hands, little may get done, and Wall Street usually likes that. Both Reagan and Clinton struggled throughout their presidencies with a legislative branch controlled by the opposition party, and stocks did extremely well under both.

"The markets would be perfectly happy with gridlock," said Valliere of Schwab Washington Research.

FULL STORY


$43 Oil reaches record high, Stocks take a hit -CNNfn
Bailiffs order Yukos to stop sales; supplies strained, concerns mount over lack of spare capacity. Nasdaq down 1% at the open.
July 28, 2004

LONDON (Reuters) - Crude oil prices hit a record high of $43 a barrel Wednesday despite an increase in U.S. crude inventories amid record imports, as traders worried about supply after bailiffs ordered Russian oil major Yukos to halt sales.

The announcement threatened to place more strain on tight international supplies.

The news intensified concerns over the lack of spare capacity in the international oil system, as the OPEC cartel pumps at its highest level for a quarter of a century to meet strong global demand growth.

U.S. light crude for September delivery rose $1.11 to $42.95 a barrel after touching $43. The previous all-time high was $42.45, set last month.

Prices jumped after a company source said bailiffs told Yukos' four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property -- including oil.

It was not immediately clear whether the order would force Yukos to halt shipments of oil straight away or simply bar the company from signing any fresh supply contracts.

The decision is likely to hasten the collapse of the firm that pumps around 20 percent of Russian crude supply -- the world's second biggest oil exporter behind Saudi Arabia -- after five years of rapid production growth.

Yukos has repeatedly said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.

STOCKS TAKE A HIT

The Nasdaq paced a stock market decline Wednesday morning, as investors gave up on extending Tuesday's rally under the pressure of some disappointing outlooks, higher oil prices and weaker durable goods orders

After 45 minutes of trading, the Nasdaq composite (down 22.98 to 1,846.12) lost more than 1 percent.

The Dow Jones industrial average (down 28.46 to 10,056.68) and the Standard & Poor's 500 (down 6.55 to 1,088.28) index both posted smaller declines.

DURABLE GOODS UP, DOLLAR DOWN, GOLD UP

Gold prices in New York rose after U.S. orders for durable goods rose less than expected, sending the dollar lower, which reduces the costs of the dollar-priced metal for buyers in Europe.

Durable goods orders rose 0.7 percent in June, the Commerce Department said, less than the 1.5 percent median growth expected by analysts. Gold slumped 4.2 percent in the past seven sessions after Federal Reserve Chairman Alan Greenspan said a slowdown in consumer spending ``should prove short-lived,'' sending the dollar to a three-week high against the euro.

http://www.cnnfn.com


July Consumer Confidence Rises to 2-Year High -Bloomberg

July 27 (Bloomberg) -- U.S. consumer confidence rose this month to a two-year high, boosted by an improving job market that helped keep new-home sales close to a record.

The Conference Board's confidence index increased to 106.1 this month from a revised 102.8. Single-family home sales sold at a 1.326 million annual rate in June, a smaller-than-expected 0.8 percent decline from May's record, the Commerce Department said in Washington.

``The improvement in consumer confidence spills over into the housing market,'' said Scott Anderson, an economist at Wells Fargo & Co. in Minneapolis.

The creation of 1.3 million jobs is lifting optimism that lagged this election year in part because of higher energy prices and the conflict in Iraq. The Conference Board said the percentage of Americans who consider jobs hard to find was lowest since October 2000. The improved outlook is helping sustain demand for housing as interest rates rise, with combined new and existing homes setting a third straight record in June.

Gold and silver futures in New York turned from higher to lower Tuesday when the dollar rose dramatically in the wake of a strong report on consumer confidence in the U.S., said analysts and traders there contacted by telephone.

"The metals market is basically trading opposite of the dollar at this point," said Dan Vaught, futures analyst in St. Louis with A.G. Edwards.

http://www.bloomberg.com


9-11 Panel Wants to Release At Least Four More Reports -DR
Sun., July 25 2004

New York -Tom Kean, chairman of the 9/11 panel, tells TIME the panel hopes to release at least four more staff-written reports, some of which contain classified documents, on such topics as aviation and border security and terrorist financing. "Interested parties may have to sue the government" to see them, according to TIME.

U.S. officials tell TIME that reports from agents and "code talk" picked up from extremists' e-mail point to a possible al-Qaeda attack before the Nov. 2 election. Says a CIA official, "We have some fairly specific information that al-Qaeda wants to come after us."

Kean reiterated the sense of foreboding: "An attack of even greater magnitude is possible and even probable," he said. "We don't have the luxury of TIME."

TIME also reports President Bush has asked Chief of Staff Andrew Card to head a working group to look at how best to assess and implement 9/11 Commission Report recommendations. After Democratic challenger John Kerry announced he would appoint a new cabinet-level National Intelligence Director (NID) "when I'm President," Bush aides hinted the President too may back the idea of a new intelligence czar. "Nothing 's off the table," a senior White House official tells TIME. "And it's definitely not off the table before the election."

"While the advent of an NID would recast the intelligence community's pecking order, it could also make things worse," writes TIME World editor Romesh Ratnesar. Says John Hamre, Deputy Secretary of Defense on the Clinton Administration, "If you have one guy for whom everyone works, then you're going to start getting a homogenous view."

Ratnesar adds, "the 9/11 panel offers few specific suggestions for how the U.S. and its allies can improve in the most critical area of all: getting actionable human intelligence on al-Qaeda and its attack plans by infiltrating terrorist networks." Says Hamre: "All these reorganizing efforts are kind of rearranging the boxes of the people that supply intelligence, when we really need to be talking about how we demand better-quality intelligence across the board."

http://www.drudgereport.com

READ: COUNTER-TERRORISM: A CITIZEN'S GUIDE - FREE DVD OFFER!


TWO GROUPS OF MIDDLE-EASTERN INVADERS CAUGHT IN COCHISE COUNTY IN PAST SIX WEEKS
Tombstone Tumbleweed
July 22, 2004

Information officer Andy Adame, from the Border Patrol Tucson sector says, “I guarantee it’s not true.”

However, seasoned Border Patrol field agents have shared some disturbing information with the Tumbleweed as well as other civilian sources with the hope the information will make it to the general public.

The Tumbleweed has verified information that a flood of middle-eastern males have been caught entering the country illegally east of Douglas, Arizona. The increased patrols in the Huachuca Mountains area of Cochise County, seems to have diverted the flow of OTM’s, “other than Mexicans” east to the Chiricahua Mountains.

Adame, who says many of the agents in the area are “green”, questions why they would have shared the information with the Tumbleweed or any other source. “Our policy is to turn any OTM’s over to the FBI and the Department of Homeland Security,” Adame said in a phone call made to the Tumbleweed Wednesday morning. For reasons of National security, Adame said his agency cannot talk about the origin of nationaity, however Adame says that since October 1, 2003, the beginning of the fiscal year for Border Patrol, agents in the Tucson sector have apprehended 5,510 illegals from countries other than Mexico or other central or South American countries. Adame described them as “people from all over the world”.

In the last month, the Tumbleweed has confirmed at least two documented accounts of Border Patrol agents encountering large groups of non-Spanish speaking males in the Chiricahua foothills and on trails along the high mountain areas.

On or about the early morning hours of June 13, 2004 Border patrol agents from the Willcox station encountered a large group of suspected illegal border crossers, estimated to be around 158, just east of the Sanders Ranch near the foothills of the Chiricauha Mountains. 71 suspected illegal aliens were apprehended; among them were 53 males of middle-eastern descent.

According to a Border Patrol field agent, the men were suspected to be Iranian or possibly Syrian nationals. “One thing’s for sure: these guys didn’t speak Spanish and after we questioned them harder we discovered they spoke poor English with a middle-eastern accent; then we caught them speaking to each other in Arabic…this is ridiculous that we don't take this more seriously, and we’re told not to say a thing to the media, but I have to,” said the agent, who spoke to the Tumbleweed with the promise of anonymity.

Adame confirms the groups of illegals were apprehended on those dates in the same area but stated, “There were no middle easterners in the group. Every single one of them was Mexican.”

The field agent stated the men were wearing the traditional uniform of migrants - baseball caps, tennis shoes, some had work boots, denim jeans and many had t-shirts with patriotic American flags and slogans. The agent added the following description “A curious thing I noticed was that they all had brand new clothing and they looked as if they had just been to the barber shop--you know--new haircuts. They were clean cut and they all had almost the exact same cut of mustaches.”

The information was corroborated by a local rancher in the area who reports that sightings of groups similar to these are on the rise. The rancher reports that groups of heavily armed paramilitary drug smugglers have also been seen in the same area.

“We’ve had groups in the hundreds coming through again. They were gone for awhile but now they're back. And of course we have the drug mules again and many are carrying automatic weapons. Many other ranchers in the area have been frustrated with the lack of response from Border Patrol. After calling over and over again to the Willcox headquarters, we might get a response a few hours later. We call them in to the Border Patrol, we only have the Willcox station, and they’re so darned far away. By the time they send in the helicopters these groups are long gone. I don’t know how many they catch but they’re coming through here heavy right now.”

On or about the evening of June 21, 2004, agents from the Willcox Border Patrol station apprehended 24 members of a larger group of Arabic speaking males located just east of the Pierce/Sunsites area of Cochise County. At least half of the males escaped capture and disappeared into the United States.

FULL STORY


Britain to Issue Public Safety Leaflet on Terrorism
Sun Jul 25, 2004
By Kate Kelland

LONDON (Reuters) - The British government will issue a public information leaflet on Monday designed to tell people what to do in the event of a terrorist attack.

Home Secretary David Blunkett said he did not want to raise unnecessary fears but the government wanted people to be "alert not alarmed" about possible terrorist threats.

"It (the leaflet) is all about helping you to do what you need to do and know what you need to know," he told BBC television on Sunday.

"This could be from a terrorism attack all the way through to a major fire, to a flood, to a situation where you're actually trying to help other people."

Blunkett was due to launch the 22-page booklet at a news conference on Monday.

He said it had the backing of all Britain's main political parties and had been modeled on a similar document produced by the Australian government for its citizens.

A spokeswoman for the Home Office said 25 million copies of the leaflet would be printed and distributed to every household in the country.

"They will be dropped though letterboxes across the country during August," she said.

She stressed the booklet had not been produced because of any enhanced or specific threat but in response to research showing Britons wanted straightforward and easily accessible information about what to do in emergencies.

FULL STORY

7/21/2004 — American Red Cross Poll Finds Public Less Prepared
Yesterday, the American Red Cross, George Washington University, the Department of Homeland Security and the Council for Excellence in Government, co-sponsored a symposium titled, “Public Preparedness—A National Imperative,” which brought together a broad spectrum of leaders to identify the issues, challenges and barriers to public preparedness, and the needs and expectations of the public both during and after a disaster. The American Red Cross chose this forum to release preparedness research conducted last month by Wirthlin Worldwide.
READ/DOWNLOAD AMERICAN RED CROSS DISASTER PREPAREDNESS BROCHURE


Oil prices rise on terrorism fears -Reuters
AFP , NEW YORK
Sunday, Jul 25, 2004

World oil prices rose on Friday amid heightened tension over the risk of terrorism.

New York's benchmark contract, light sweet crude for delivery in September, climbed BrentUS$0. 31 to US$41.67 a barrel. Brent North Sea for September advanced US$0.26 to US$38.27.

Traders appeared nervous ahead of the weekend, said AG Edwards market analyst Bill O'Grady.

"There are all kind of worries that something bad is going to happen during the Democratic convention," he said.

The FBI said on Friday it was looking into unconfirmed reports that a domestic group was planning to attack media vehicles during the Democratic Convention, which opens in Boston tomorrow and runs through to Thursday.

Concern over worldwide tensions mounted after kidnappers in Iraq seized Mohammed Mamdouh Hilmi Kotb, the third most senior official at the Egyptian embassy in Baghdad and the first diplomat taken in Iraq's wave of kidnappings.

"The Egyptian diplomat being kidnapped showed that Iraq is still a mess," O'Grady said.

Prices also were supported by a financial crisis at Russian energy giant Yukos, which warned it would declare bankruptcy if the government sold its Yuganskneftegas unit to cover a multi-billion-dollar tax bill.

"It is unclear how much of the bankruptcy talk is designed to put pressure on the Russian government," Informa Global Markets analyst Peter Luxton commented in London.

PHOTO: The Eirick Raude offshore rig owned by the Norwegian company Ocean Rig is seen in this file photo from late last year. Spain's Repsol has rented the rig and has been drilling a wildcat 29km off Cuba's northwest coast since last month. Oil experts say Cuba's Gulf waters could harbor large quantities of medium-grade crude.

FULL STORY


COMMENTARY


DNC: LIARS OF THE WORLD UNITE! - Craig R. Smith, SATC
July 27, 2004

Former President Bill Clinton told the DNC last night that the liberal worldview is the great "uniter," while the opposing conservative worldview is the great "divider." But should lies unite us or divide us?

The lies of the liberal worldview offers a form of deceptive “unity,” but at the expense of the truth. Furthermore, truth has a long history of dividing nations -- by rooting out the evil from the good. Bottom line: The liberals are aiming at the lowest common denominator by promising "unity" without truth or consequences.

Is America really ready to be “united,” or does the dynamic tension (division) between the liberal and conservative worldviews ultimately make us stronger?

The heart of the liberal worldview is to level our culture to the lowest common denominator by trusting the federal government to oversee the redistribution wealth. Cradle to grave health, wealth and security is the ultimate goal of liberal politics.

The heart of the conservative worldview is to trust in the free market and self-government to empower an equal opportunity to all Americans to provide their own health, wealth and security, with as little interference from federal government as possible.

So last night I give Clinton an "A" for style, but a "D" for substance. Slick Willy never touched on economic reform, other than lost jobs. That was by design -- not by mistake I'm sure. Kerry's economic numbers simply do not add up, which explains why the Democrats don't want to get into specifics -- because if they did -- they would be exposed for the frauds that they are.

Gene Sperling was on "Kudlow and Kramer" touting the new Kerry plan and Kudlow tore it apart. Kudlow knows that new taxes are on the way under Kerry and that capital (which the markets need to survive) will be put back under the mattresses to avoid the tax man.

This convention is a joke and I'm encouraged to see that the American people saw right through it. Look at the polls this morning. Bush is up 2 points. He should be down after last night's extravaganza. The Dems should have gotten a bounce, but instead they dropped.

Interesting NOTE: Gallup Poll: 59% of Americans who claim to be very religious support President Bush, while 69% who claim they are not religious support John Kerry. Who says that religion can be separated from politics?

Read more on 2004: The Great Economics Debate by Craig R. Smith.


THE DEMOCRATIC MYTH, AMERICA THE FREE? -Bill Bonner, DR
July 27, 2004

According to Democratic Myth, America was a paradise when George Bush walked into the White House. Then, the terrorists attacked and all of a sudden it was a new world. Hillary Rodham Clinton told the crowd that she immediately marched downtown to the site of the attack and thought she was staring into the gates of Hell. America is now engaged in a serious war with serious opponents, say the Democrats.

But even the destruction of the World Trade Center towers had its good side, according to the party of Carter, Johnson and Clinton; it brought people together. Uniting people was a major theme among the Democrats. They seemed almost pathological about it. Hillary's husband made a point of it, as did almost all other speakers. He thought that every major crisis was merely an opportunity to 'build a more perfect union.'

After a while, we began to wonder if America already had too much union. Why shouldn't people think different things...do different things...and go their separate ways? But the Democrats all seemed to want to get people together and get them all thinking alike and working towards the same goals. Meanwhile, one of the convention's themes was supposed to be 'strength through diversity.' It didn't seem to matter that the two ideas are contradictory.

As they say on Wall Street, when everyone is thinking the same thing, no one is thinking. No one seemed to be doing much thinking at the Democratic National Convention. We looked at the delegates in their stupid hats, with their insipid signs and vacant faces. We wondered whether any of them had ever had a thought in his life.

The American union was near perfect when Bill Clinton left Washington, according to the speakers. Then, the Republican President misled the nation on Iraq, and bungled the war against terror in order to attack Saddam. He squandered the nation's treasure and its honor...and allowed greedy lobbyists for the rich, who have Republicans in their hip pockets, to eliminate vital social programs so millionaires could get a tax break.

None of the speakers mentioned that their man Kerry had gone along with the war and practically everything else. In fact, hardly a single cockamamie scheme has made its way through Congress, since he's been there, without getting his signature on it.

None mentioned the consumer debt bubble...the dollar...the trade deficit...or seemed to care how the federal government was going to make good on its promises. None worried that democratic voters got poorer, not richer during the Clinton years. Except for getting along with other nations better...and stealing more money from the rich...none mentioned anything their man would do differently.

Nor did anybody bring up this little item, showing that the Democrats are as deep in the pockets of rich lobbyists as Republicans. Maybe deeper:

"...The study also found that Republicans raised more than Democrats from individuals who contributed small and medium amounts of money during the 2002 election cycle, but Democrats far outpaced Republicans among deep-pocketed givers."

"Republican candidates and parties topped their Democratic counterparts, $68 million to $44 million, in fundraising from individuals who contributed under $1,000 in itemized contributions for the 2002 elections. Among donors giving $1,000 or more, Republicans again beat out Democrats, $317 million to $307 million.

"But the trend was reversed among individuals at higher giving levels, from whom Democrats raised far more money than Republicans. Among donors of $10,000 or more, Democrats out- raised Republicans, $140 million to $111 million. Among donors of $100,000 or more, Democrats raised $72 million to the Republicans' $34 million. And among the most generous givers - those contributing $1 million or more - Democrats far outdistanced Republicans, $36 million to just over $3 million..."

*** More from Alexis de Tocqueville:

"Democracy in America" by Alexis de Tocqueville Volume 2, Section III, Chapter XXII

"No protracted war can fail to endanger the freedom of a democratic country. Not indeed that after every victory it is to be apprehended that the victorious generals will possess themselves by force of the supreme power, after the manner of Sulla and Caesar; the danger is of another kind. War does not always give over democratic communities to military government, but it must invariably and immeasurably increase the powers of civil government; it must almost compulsorily concentrate the direction of all men and the management of all things in the hands of the administration.

"If it does not lead to despotism by sudden violence, it prepares men for it more gently by their habits. All those who seek to destroy the liberties of a democratic nation ought to know that war is the surest and the shortest means to accomplish it. This is the first axiom of the science."

HAS AMERICA BECOME LESS FREE?

Looking around, the evidence is mixed. Eighty years ago, you couldn't even take a drink without risking a visit from the cops. Books were banned in Boston if they were considered too racy. And shacking up with a woman other than your wife -- especially if she was the wrong color -- was likely to get you arrested on a morals charge.

All that is history. There are no morals charges anymore, because there are no morals worth charging. What used to be sin is now not only permissible -- but actually fashionable. The most sordid spectacles make their way to prime time -- on the evening news.

But while sinners have been let loose, the honest man can hardly make a move without running into someone who wants to protect society from him. Giving his name to the fuzz on the scene is the least of it. He has to reveal every detail of his life -- for tax returns, passports, medicare, social security, insurance, business licenses, gun licences, hunting licenses, professional licenses, building licenses, dog licences, liquor licenses.

It may be a licentious age, but never have so many licenses been required to mind your own business. Except for the First Amendment, guaranteeing the right to say what you want, nearly every protection of the constitution has been swept aside so the do-gooders, regulators, politicians, inspectors, gendarmes, world improvers and snoops can get a grip on you.

FULL STORY


THE CURRENCY OF TERRORISM -Thomas Kostigen, CBSMW
Threats are financial information, war a medium of exchange
July 26, 2004

SANTA MONICA, Calif. (CBS.MW) -- A story on WomensWallStreet.com chronicles the compelling first-hand account of a woman who may have been caught up in a failed terrorist act aboard an airplane. The account is getting bounced around the Internet -- especially among Wall Street firms -- and is generating much needed debate over what constitutes racial profiling as well as the more ominous question of how safe are we from a new terrorist attack.

The letter is rife with frightening security-breach prospects, and the writer, Annie Jacobsen, provides details of feedback and responses she's received from pilots, airlines and national security agencies. In short, it seems, there have been numerous, failed terrorist attacks aboard airlines since September 11, 2001. Moreover, "dry runs," where terrorists practice their intended act, also reportedly occur with regularity.

Jacobsen quotes two airline pilots who confirm this. One of the pilots claims that aborted terrorist acts on airplanes "occur more than you'd like to think," and are a "dirty little secret" in the airline industry.

In the context of the past week, which saw the release of the 9/11 Commission Report, and claims by numerous government officials that another terrorist attack on U.S. soil is imminent -- Jacobsen's account is harrowing. Indeed, we can feel the tension build as she boards a Northwest airplane with her husband and young son, and begins to notice the curious actions of 14 Syrian men on board.

We can understand her attempts to brush off the conspiring looks and glances she sees between the men. We can empathize with her questioning whether or not she is "racially profiling." And we can certainly react with just as much alarm when the flight crew informs her that they are aware of what's going on -- indeed, they believe something is going on -- and federal marshals are surrounding her.

The full account of the story can be found at www.womenswallstreet.com, as well as feedback and opinions. Read both Part I and II.

The article begins with an editor's note discussing how the story was handled, and the debate of it even being published. It ends with the tag line, "What does it have to do with finances? Nothing, and everything."

I say the story has "everything" to with finance and investing. The capital markets react on news of a terror threat. And terrorism is a new variable that must be plugged into any investment scenario today. Wall Street is a different place, literally and figuratively, after 9/11. New threats and dangers need to be exposed, not hidden -- as the basic tenet of the 9/11 commission report makes clear.

When the Federal Air Marshal Services appear to lack proper follow up, it bears scrutiny. When it's revealed that it's "policy today to fine airlines if they have more than two young Arab males in secondary questioning because that's discriminatory," it bears serious questioning. Logic, it seems, has failed to enter the preventive equation of thwarting terror.

Lessons in capitalism

In the bigger picture, terrorism is a hard lesson in globalism. What tools do we have to deal with people of an unfamiliar culture who are acting in unfamiliar ways (e.g. blowing up innocent people -- and themselves -- as a form of communication?)

It's also a lesson in capitalism, since in many ways money is what terrorists are attacking. Money, as an equation itself, is defined as trust, information and medium of exchange. Those are the requirements for trade.

FULL STORY
READ MORE ABOUT FINANCIAL TERRORISM THREAT


GOLD: THE RED CROSS OF INVESTMENT ASSETS

Let's do a quick mid-year checkup on the financial markets … let's see, so far it's been a violent year for stocks and bonds, which are both down.

Meanwhile inflation, real estate and interest rates are all up.

As for gold coins, well folks, some are up, and some are down -- depending upon the QUALITY.

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Faith versus History - John Mauldin, Frontlinethoughts.com
July 24, 2004

"In the 17 years from the end of 1964 to the end of 1981, the Dow Jones Industrial Average gained exactly one-tenth of 1 percent. In the bull market that followed from 1982 to the peak in March 2000, the Dow rose from 875 to 11,723, a spectacular rise of 1,239 percent or over 13 times from the starting point.

"We all remember what a difficult time that first period was. There were three recessions, oil shocks, Vietnam, stagflation, the collapse of the Nifty Fifty, Watergate, short-term interest rates rising to 18 percent, gold at $800, and very high inflation. "Bad news on the doorstep" seemed to be the theme of the period.

"Compare that to the subsequent period. Tax cuts and lowering interest rates fueled a boom in the stock market and the economy. Computers invaded our lives, making us more productive. By the end of the period, even Alan Greenspan was extolling the virtues of technology-led productivity growth. Inflation became a nonfactor, and mortgage rates dropped almost as fast as our property values rose. The Internet promised new ways to prosper. Peace seemed to be breaking out, and government budgets ran to surpluses.

"It stands to reason, doesn't it, that the economy did poorly during the long bear market period and far better during the bull market? You would think that, but the reality is far different. Gross domestic product (GDP) actually grew 373 percent from 1964 through 1981. During the period from 1982 until the beginning of 2000, the economy grew only 196 percent, or about half of the earlier period.

"Even if you take out the effects of inflation, you find the economy grew almost identically in both periods. In the first period (a total of 17 years) real GDP growth was 74 percent, and the second (a total of 18 years) GDP was slightly higher at 87 percent.

"Yet if you take into account inflation, you didn't see a profit in your 1966 buy-and-hold portfolio of Dow stocks in 1982; you had to wait another 10 years, until 1992, for an inflation-adjusted return.

"Yet, if you listen to many advisors and analysts today, you should be buying stocks because the U.S. economy is growing, or at least getting ready to grow. "It is always a bad idea," we are told, "to bet against the U.S. economy."

This strategy would be valid if the economy was the main driver of stock market prices. The economy more than doubled in real terms from the end of 1930 through 1950. Yet stocks prices were roughly the same after 20 years!

A reasonable analysis of the links between stock markets and the economy shows that stock markets do tend to go down before and during recessions, but they do not always go back to new highs after recessions.

Investors are told to invest for the long run. "It is impossible to time the market" is the mantra of mutual fund managers everywhere, even as they buy and sell stocks in a feverish frenzy, trying to improve their performance. They can trot out studies that show that long-term investors always do better, even as the churn rate of professional managers is far beyond that of ordinary average investors.

I believe most of these studies are grossly misleading, and are now doing great damage to the retirement prospects of entire generations. In fact, the advice that traditional money managers proffer is precisely the wrong strategy for a secular bear market."

A Few Thoughts on Economic Growth ... FULL STORY


The Biggest Flip-Flopper: Kerry or Bush? -Michael A. Peroutka,
2004 Pres. Candidate, Constitutional Party

July 28, 2004

The Republicans think they have a great thing going with their theme that John Kerry is a “flip-flopper.” And at this week’s Democrat Convention, the GOP has something there called a truth-squad the purpose of which is to show that Kerry is trying to hide the fact that he is a Big Government Liberal. To expose Kerry’s deception, the Republicans have set up a Web page at DemsExtremeMakeover.

Get it? The Republicans are saying that Kerry, by trying trick us into believing he is something he is not, is undergoing an extreme makeover. At a press conference in New York City, Ed Gillespie, chairman of the Republican National Committee, has said, in case you haven’t gotten the message: “We believe for the next four days, the Democrats are going to attempt an extreme-makeover of John Kerry’s record.”

But, the Republicans are skating here on very thin ice. In fact, they have fallen through the ice. Because on the Big Government issue, President George Bush is the biggest flip-flopper of all!

In modern times, starting with Republican Presidential nominee Barry Goldwater in 1964, the GOP has portrayed itself as the Party of small, limited, Constitutional government. In his acceptance speech before the Republican National Convention on July 16, 1964, Goldwater said that freedom was made orderly in our country “by our Constitutional government.” He denounced “centralized planning” saying that “the cause” --- not a cause but THE cause --- of the Republican Party was “to resist concentration of powers.” He said government should perform “only…Constitutionally sanctioned tasks.”

The 1964 Republican Party Platform denounced leaders in the Democrat Party because they “have sought the enlargement of Federal power,” because they were “Federal extremists, impulsive in the use of national power, improvident in the management of public funds.” Such individuals “so recklessly disposed,” it was said, “cannot be trusted with authority over their fellow citizens.” Echoing Goldwater, this Platform said the Federal Government “should act only in areas where it has Constitutional authority to act.”

As recently as 1999, George W. Bush himself wrote a book titled “A Charge To Keep” in which he denounced the Federal Government for being “too big and powerful.” He criticized what he called “the new culture” which said “if people were poor, the government should feed them. If someone had no house, the government should provide one.” He said: “We must reduce the reach and scope of the Federal Government, returning it to its proper, limited role.” Oh, and he also said: “I am a fiscal conservative.”

Then Mr. Bush was elected President.

-Did we get “Constitutional government”?
-Was “Federal power” reduced?
-Has the Federal Government become smaller?
-Has the “reach and scope” of the Federal Government been reduced?
-Has the President been “a fiscal conservative”?

The answer to all these questions is: No! --- A thousand times no!

In fact, George Bush has given us the most un-Constitutional, powerful, biggest, far-reaching, fiscally irresponsible, intrusive, debt-ridden Federal Government in the history of the universe! If there was, in the "Guinness Book of World Records," such a category, Mr. Bush, Big Governmentwise, would be Flip-Flopper Number One.

For God, Family, & the Republic!

peroutka2004.com
Related story:
Third Parties Could Be Problem for Bush -Reuters- 6/21/04


KERRY'S BATTLE PLAN -BusinessWeek
He can't simply rely on anti-Bush fervor to get elected. So he's out to ease the middle-class squeeze
July 26, 2004

After a Lazarus-like revival from the back of the primary pack, the lanky Massachusetts senator has repeatedly surprised political sages. Kerry overcame a ponderous campaign style to unite his party, helped Dems shatter fund-raising records, and has pulled ahead of a wartime President despite a growing economy. Advertisement

Yet as he preps for his July 29 star turn, Kerry realizes that even a studiously centrist convention will still leave him a long way from his goal of the Presidency. Despite discontent with George W. Bush, a large swath of America feels it doesn't know enough about Kerry, his heart, or his soul to consider him as an alternative -- yet. And much of what voters do know isn't flattering, thanks in part to a GOP ad blitz. In a July 10-13 poll by the liberal Democracy Corps, 60% thought Kerry would raise their taxes despite his pledge to limit the bite to the wealthy; 51% considered him too liberal.

Kerry needs to change such attitudes, starting with a makeover in Boston. But with the White House accelerating the military disengagement in Iraq, he also knows he can no longer count on voter disillusionment with the troubled U.S. occupation to clinch the election. So as attention shifts back to the economy, Kerry has renewed his emphasis on jobs and the "middle-class squeeze."

His agenda -- a set of programs aimed at helping workers cope with rising health and tuition costs, the offshoring of jobs, and stagnant wages -- is complex and pricey. It's also a sketchy blueprint that, should Kerry win the election, will almost certainly undergo radical surgery when the candidate confronts budget reality and what's likely to be a hostile GOP Congress. At its core is a grand bargain: Kerry offers a $650 billion health-insurance plan and $200 billion in education spending, to be financed by rolling back Bush's tax cuts for families earning more than $200,000 -- about 3% of taxpayers. That could free up some $600 billion to $860 billion -- money the Dems feel could be better used to ease stress on working families and spur consumption.

But that would leave nothing for Kerry's pledge to slash the deficit. And if a GOP-controlled Congress balks at rolling back tax breaks for the wealthy, he would have to drastically scale down his ambitions, risking the ire of voters. Other potential problems: In addition to stripping the well-heeled of their top tax rate, Kerrynomics would hike their taxes on capital gains and dividends. Kerry sees this as a matter of fairness. But some economists worry that such moves could harm investor psychology and capital formation. "Cutting dividend taxes was the single most important thing Republicans did under Bush," says American Enterprise Institute economist Kevin A. Hassett. James C. Tyree, CEO of Mesirow Financial Holdings Inc., a Chicago money manager, backs most of Kerry's tax ideas, but says: "For future growth, the capital-gains cut is critical."

FORMULA FOR GROWTH

Kerry, however, believes tilting away from the rich -- who have more propensity to save than average workers -- and redirecting money toward "human capital" is a better formula for growth. "If we're going to be competitive in the global economy, we've got to dig out of our fiscal hole, fix health care, and have a more effective public education system," says former Treasury Secretary Robert E. Rubin, a Kerry confidante. "If Kerry gets elected, he'd be terrific on these issues."

FULL STORY
READ MORE: 2004: THE GREAT ECONOMICS DEBATE


O'Reilly's "No Spin Zone" is a farce -Bill Murphy, LemetropoleCafe.com
July 25, 2004

Bill O'Reilly of Fox News' "O'Reilly Factor" is a phony windbag. His so-called "No Spin Zone" is a farce. I can say with a fair amount of authority after witnessing years of efforts by the GATA ARMY to have him address the gold manipulation issue. He and his staff have refused to answer thousands of emails of requests by our camp to give this critical issue to all Americans some visibility on his show.

O'Reilly is no different than the rest of the US financial market media in shying away from a topic which threatens the credibility of America's most respected and powerful financial institutions -- as well as a facet of the US Government itself. The man is a phony because he ducks from any issue which could put him at odds with the elitists who are ruling the day in America, ones who are taking America down the worst of paths at the expense of an unknowing public.

Not only did this coward run from requests to air the real gold story from those of us he does not know, the man did not even have the courtesy to respond to a letter about GATA from renowned author and GATA supporter, Arthur Hailey (Airport, Hotel, etc), whom he mentioned in one of his own books.

Furthermore, Mr. "big mouth" O'Reilly refused to answer any serious questions about the gold market after his featured presentation at the New Orleans Investment Conference last November in Louisiana. The man is a wimp of grotesque and hypocritical proportions. Here is his latest cop out:
O'Reilly chickens out of his Patriot Act challenge
The "No Spin Zone" now spinning out of control

(-PRWEB-) July 24, 2004 -- On July 13, Bill O'Reilly offered a challenge to debate anyone on the Patriot Act. His website has a transcript of this challenge.

Hollywood producer Aaron Russo (Trading Places, The Rose) accepted the O'Reilly challenge on behalf of his friend, Libertarian presidential candidate Michael Badnarik. At this point, O'Reilly flipped 180 degrees and declined to debate Badnarik.

FULL STORY


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On the Separation of Republican and Democrat -Tom Jackson, GoStrategic
Discerning the Times
August 1, 2004

A new Gallup Poll indicates that there is an increasing correlation between religious piety or lack thereof and whether you are a Republican or Democrat.

“Religious indicators can predict political activity,” says Frank Newport, a researcher, as reported in a recent San Francisco Chronicle article on the 2004 election campaign. He goes on to claim, “Show me somebody with a Ph.D. who doesn’t go to church, and I’ll show you a Democrat.” Whoops! Did he really say that?

The poll seems to build a strong case: 59% of Americans who claim to be very religious support President Bush, while 69% who claim they are not religious support John Kerry. Well, shut my mouth, honey! I thought religion was not supposed to have anything to do with our politics. Haven’t they heard of the separation of Church and State?

Neutrality in Politics?

This sort of destroys the politics of neutrality, doesn’t it? By that I mean politics are somehow to be this sacrosanct bubble where religious prejudices are checked at the door of the voting booth. We’re constantly being told religion is either irrelevant or has no rightful place in politics. This argument is best exemplified by the frequent parroting of so many political candidates who claim to be “personally opposed” to this or that issue, but of course, “the people should have the right to decide.” This is just a phony cover for legislative proposals for which no politician wants to take personal responsibility and so hides behind the lower nature of the masses for the votes. We’ve seen it with gambling, abortion, gay marriage, etc. – all issues about which many people have strong religious views.

Now Republicans and Democrats are dividing more along religious lines, confirming what has always been a factor, but increasingly so as the lines are dug deeper in the culture war.

Do I believe there is a possible danger of mixing politics and religion? Sure. I certainly don’t want the Church to be a step-and-fetch-it to a political party, nor tied too closely behind an elephant much less a jackass. Bad things can happen there. However, this poll confirms what we’ve known all along. You don’t leave your convictions behind before entering the voting booth. Behind every politician or political issue are character and ethics. Behind character and ethics are morals. Behind morals are faith assumptions and beliefs about the meaning of life and how to live it, especially in the context of our culture and nation.

The only way to keep your religious life private is to become a schizophrenic, or worse a hypocrite. The American public increasingly realizes that faith matters, mostly by recognizing how alarming and rapid has been the decline in American values as we have systematically removed religion from public life. The only people benefiting from this falsely framed wall of separation are those who are doing the systematic removal of all things religious.

Testing Our Tolerance

If anything has happened of real benefit since 9/11, it’s that with the exposure to a truly different religion or worldview- Islam, we are objectively witnessing how much religion does have to do with politics. Throw in a religion that has no underlying philosophy of the distinction between Church and State, and we will now see how much conviction we really do have about tolerance and religious pluralism. I can pretend to see no evil, hear no evil, and speak no evil, or I can say religious assumptions matter in the real political world and always have. Can the Church become too closely aligned to a political party? Yes, if your highest allegiance is to the State. If your highest allegiance is to God, you will not yoke yourself to a leader, a party, or a cause that does not represent the core of your beliefs.

FULL STORY


ABOUT THE EDITOR

David M. Bradshaw is Editor of Real Money Perspectives, publisher of Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (7/01) and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 1997, he produced a one-hour TV documentary, "Preparing Wisely for the Next Millennium," which was distributed free of charge at Blockbuster Video nationally. In 1999, he produced a one-hour radio special, "The Big Picture: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. ...MORE NOTE: Youngest daughter Braida Zoe (5 months) is learning the importance of wearing a crash helmet -- a valuable habit for us all to remember... just in case!


DISCLAIMER: All of the information in this story is believed to be true, however errors are possible.
Past performance is no guarantee of future performance. All investments have risk.

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